FiftyThree’s statement to The Verge:

Every Pencil needs Paper. We’re excited to launch the all-new Paper on iPhone and iPad tomorrow, after which creative thinkers everywhere will see their phones and their ideas in a new light. We believe pen-and-touch input is the foundation for a new type of productivity geared towards creative thinking. Our and Apple’s products open up these tools to even more people, which we support. We at FiftyThree are excited to reveal where we think the next chapter of productivity is headed.

I don’t actually think Apple’s competing product will hurt FiftyThree. Their stylus is less expensive, works with all iPads and iPhones, and features the eraser end which is both intuitive and convenient.